Given weak economic data lately, the announcement didn't come as a complete surprise. A CNNMoney survey of economists had predicted the Fed would act to extend the program.

Inflation is near the Fed's target, but the unemployment rate, at 8.2% is far above acceptable levels. Meanwhile, the most recent jobs report showed American employers added 69,000 jobs in May, the weakest hiring in a year.

Stocksfell sharply at first, but then recovered some of their losses later in the day.

The Federal Reserve has kept interest rates at historic lows since December 2008, as a way to free up credit following the financial crisis.

To push rates even lower, the central bank has also purchased more than $2 trillion in assets in two rounds of so-called quantitative easing, or QE.

The effect on Main Street has been questionable though. Mortgage rates are at record lows, but even so, new home sales have been choppy and banks are still unwilling to lend to anyone with less-than-perfect credit. Small business owners are also struggling to get loans.

Fed policymakers voted Wednesday to keep interest rates "exceptionally low" for at least another two years, indicating they believe the economy will remain weak enough to warrant an extra boost "at least through late 2014."

Of the Fed's 12 voting members, Richmond Fed President Jeffrey Lacker was the only one to oppose the decision.